Top IMF and Brazilian officials clinched the deal last month

The extension will give Brazil access to a standby loan worth more than $14bn next year.

The Brazilian Government says it will not draw on the money it sees as a precaution against economic turbulence.

IMF sources told Reuters news agency the deal was approved unanimously, with board members praising Brazil's performance as exemplary.

However, the sources added that there were still concerns about Brazil's lack of economic growth.

Tough policies

The deal had been awaiting formal approval by the IMF board after details were disclosed last month by Brazilian Finance Minister Antonio Palocci and the IMF's number two, Anne Krueger.

The new agreement combines $6.6bn of new cash with $8.2bn from the current loan which Brazil has not yet withdrawn.

The IMF also agreed to a request by Brazil to extend the deadline for loan repayments worth more than $5bn that fall due in 2005 and 2006.

As part of the deal, the government of President Luiz Inacio Lula da Silva has pledged to maintain tough fiscal policies, including running a primary budget surplus of 4.25% of gross domestic product, as agreed with the IMF.

The IMF's Ms Krueger said last month that the standby loan would be available to provide security for the Brazilian economy against external shocks, while the government completed the process of restoring confidence and the basis for sustainable growth.

Before last year's presidential election, the IMF granted Brazil a $30bn loan to prevent the country defaulting on its foreign debt and to calm financial markets concerned about a Lula victory.